Parkes' Financial Institutions and Markets Assignments Page
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Course Assignments:
Week 10
March 3, 2009 Finish Chapter 24 and Begin Chapter 19: Insurance Companies and Pension Funds
- Bring your calculators today!!
- Homework on options markets and interest rates swaps is DUE Today.
- Day 17 PPT - "Not available yet"
- Chapter 24: Options (notice ONE PPT - One Chapter in the 6th Edition)
- Swaps and Credit Derivatives
- Credit Derivatives
- As Warren Buffet says: Are Credit Derivatives a time bomb?
- Mishkin Chapter 19 PPT - Insurance Companies and Pension Funds
- Chapter 19: Insurance Companies and Pension Funds
- Insurance Companies - certainty equivalent
- Fundamentals of Insurance
- Adverse Selection and Moral Hazard
- Deductible
March 5, 2009 REVIEW FOR THE FINAL EXAM!
Week 11
March 12, 2009 THE FINAL EXAM!
PAST ASSIGNMENTS:
Week 9
February 24, 2009 Chapter 23: Futures and Forward Contracts
February 26, 2009 Chapter 23: Futures and Forward Contracts continued and Intro to Chapter 24: Options
- Bring your calculators today!! - Tutorial on Options Today - Homework assigned
- Homework on futures markets and hedging. Hint: remember the numbers are already in 100s!
- Day 16 PPT - "Not available yet"
- Chapter 23: Continued
- Chapter 24: Options (notice ONE PPT - One Chapter in the 6th Edition)
- Strike Price
- American versus European Options
- Option Contracts: Puts versus Calls
Week 8
February 17, 2009 Chapter 15: The Banking Firm and Bank Management
- For interest rates you can also use the commercial bank lending rate under the World Factbook for your country at the CIA website
- Two potential websites to help with Homework:The CIA website and Econstats A little change - no graph needed - just expectations about the exchange rate.
You may need to search to find a year old interest rate for your country - the Central Bank of the country is a good place to start.
February 19, 2009 Chapter 15: The Banking Firm and Bank Management (Continued)
General Principles of Bank Management
Liquidity Management
Asset Management
Liability Management
Capital Adequacy Management - ROA Versus ROE and EM
Measuring a Bank's Performance
Operating Income
Operating Expenses
Week 7
February 10, 2009 Chapter 12: Foreign Exchange Markets
Exchange Rates in the Short-Run
Expected Returns - Domestic versus Foreign
The Interest Parity Condition
February 12, 2009 Finish Chapter 12: Foreign Exchange Markets and Chapter 13
Day 12 PPT - "Assignment for Tuesday"
Exchange Rates in the Short-Run
Equilibrium in the Foreign Exchange Market
Expected Returns - Domestic versus Foreign
The Interest Parity Condition
Equilibrium in the Foreign Exchange Market
Explaining Changes in Exchange Rates
- Do #8 on page 360 for Tuesday's class - 5 points
January 10 - February 7, 2009 SPRING FESTIVAL - Happy New Year - NO CLASSES!!
Week 6
January 6, 2009 Finish Chapter 11: The Mortgage Markets and Chapter 12: Foreign Exchange Markets
- Bring your calculators today!!
- Turn in Mortgage "Points" quiz from last week at the beginning of class - Questions before class!
- ARE YOU READY FOR THE TEST? - Some thoughts about preparation for any exam.
- Homework calculating the Price of a stock - Complete the Gordon Growth Model Price at home, we will calculate the P/E ratio in Class
- Mortgages continued - Today's mortgage market
- Midterm Exam is on Thursday, Jan. 8 at 6:30 pm!
- Day 10 PPT - "MBS and Pass-Through definitions" from Investopedia
January 8, 2009 Midterm Test in the Evening - NO CLASSES During the Day!!
- MIDTERM EXAM at 6:30 to 8 pm!!!
- Class 1 and 2: Room 2112
- Class 3: Room 2212
Week 5
December 30, 2008 Chapter 11: The Mortgage Markets (in our text) and begin Chapter 12: Foreign Exchange Markets
- Problem Set 4 due at the beginning of class today!
- Bring your calculators today!!
- Midterm Exam is on Thursday, Jan. 8 at 6:30 pm!
- Day 9 PPT
- Day 9 PPT - The Fed, a brief
- Chapter 11: The Mortgage Market
- Mishin Chapter 11 PPT: Mortgages! (Called Chapter 12 on PPT)
- Types of Mortgage Loans
- Conventional or Standard
- ARMs - Adjustable Rate Mortgages
- Others
- Characteristics of the Residential Mortgage
- Mortgage interest rates
- Points
- PMI
- Mortgage Loan Amortization
- Computing the Payment on a Mortgage
January 1, 2009 New Years Day - NO CLASSES!!
- RELAX AND ENJOY THE DAY!!!
Week 4
December 23, 2008 Finish Chapter 10: Bond Markets (and Begin Chapter 11: PPT - Stocks)
December 25, 2008 MERRY CHRISTMAS - Chapter 10 Stocks and begin Chapter 11: The Mortgage Markets (in our text)
Week 3
December 16, 2008 Finish 8 and begin Chapter 9: The Money Markets
December 18, 2008 Finish Chapter 9, Chapter 4 and Begin Chapter 10: The Bond Markets
- Bring your calculators today!!
- Quiz today - ???
- Problem Set 2 due today! TUTORIAL AT THE BEGINNING OF CLASS TODAY!
- Day 6 PPT
- Mishkin's Chapter 9 PPT - The Money Market
- Mishkin's Chapter 10 PPT - The Bond Market
- Chapter 9: Money Market Financial Instruments
- US Treasury Bills
- Negotiable CDs
- Commercial Paper (know those three components of this one)
- Banker's Acceptances
- Federal Funds - Daily and Target FF rates, 2008
- Eurodollars
- Liquidity Preference "Framework:" The Supply and Demand for Money (End of Chapter 4 in our book)
- 1st note: Quantity of Assets Supplied = Quantity of Assets Demanded
- 2nd note: The interest rate is the opportunity cost of holding money - it's like the price of money
- Shifts in Demand and Supply
- Applications: Boom/Recession in the Economy, Price level changes, Money Supply Changes
- Compare the results for Booms/Recessions with the Loanable Funds Framework - they are equivalent!
- Higher GROWTH RATE in the Money Supply: the "Effects" Last topic in Chapter 4
- Chapter 10: Bond Market Financial Instruments
- US Government securities: U.S. Treasuries mostly
- Capital Market Interest Rates
For Tuesday, December 23, 2008 find the current 10 yr. U.S. Treasury Note rate, 30 yr. U.S. Treasury Bond rate,
average corporate bond AAA and BBB rates (see p. 293), and the a recent municipal bond rate. (5 pts)
Week 2
December 9, 2008 Finish Chapter 3 and Chapter 4 The Behavior of Interest Rates
- Bring your calculators today!!
- Problem Set 1 due today! After I collect them, the assignments are late and 3 points will be subtracted.
- Let's do the calculations:
- A Bank's Liabilities - IOUs (What's an IOU?) What is money?
- Quiz today - calculate an inflation rate!
- Discount Bonds - U.S. Treasury Bills, for example
- Return versus interest rate - capital gains/losses
- Reinvestment Risk
- Central Banks - the Fed and the PBC (People's Bank of China)
- Mishkin's Chapter 4 PPT
- The Theory of Asset Demand
- Wealth
- Expected return
- Risk
- Liquidity
- Also the Benefits of Diversification
The Loanable Funds "Framework"
Notice the y-t-m (interest rate) IS the expected return!
Key also is that "The interest rate is the inverse of the Price of a Bond"
Look at BOTH graphs - The Bond Market, which is the inverse of the Loanable Funds Market
"Shifts"
- Demand, know the Theory of Asset Demand
- Supply, Booms/Recessions, Expected Inflation and Government Activities
4 Applications - 1. "The Fisher Effect," 2. Business Cycles, 3. Negative Savings Rates and 4. Government Budget Deficit
Credit Markets and the Yield Curve
Problem Set 2 - assigned today - "Interest rate calculations" Due on December 18
Day 3 PPT
Ever wonder what a Collateralized Debt Obligation is?
December 11, 2008 Finish Chapter 4 and Chapter 8: The Fed, Economic Indicators and Markets
- Bring your calculators today!!
- Day 4 PPT
- Chapter 8: The Fed
- Mishkin's Chapter 8 PPT
- The Fed's Balance Sheet
- Open Market Operations versus Discount lending - how does each affect the balance sheet
- The Federal Funds Market - Changed since our book - notice the "FUNKY" Supply curve in the PPT
- What are Federal Funds? A great definition question for the Mid-term exam! (See pg. 262)
- The "Tools" and the Affect upon the Money Supply - Notice the PPT
- Tools of the Central Bank: Open Market Operations (Buying and Selling Bonds), Discount Rate, Required Reserve Rate
- Quiz today - calculate some growth rates!
- Money Rates - Note that data may be found in the Federal Reserve Board of Governor's website.
- For Tuesday, December 16, 2008 find the prime rate, near closing bid Fed Funds rate,
commercial paper rate, T-Bill rate and LIBOR rate. Hint see p. 273. (5 pts)
- Three Places worth looking for rates for Tuesday:
- Side thought from last year:
- Is the Fed on a NEW Monetary Policy model?
Week 1
December 2, 2008 An Introduction and begin Chapter 3: Understanding Interest Rates
- An Introduction to Financial Institutions and Markets
- Chapter 1: Very Briefly, Financial Markets
- Mishkin's Chapter 1 MOSTLY READING!
- Debt Markets and Interest Rates (SHIBOR)
- Graph - T-Bills versus US Gov't Bonds versus Corporate Bonds - what's the difference? Page 5
- "The interest Rate" - notice that (mostly) all interest rates track together
- Stock Markets
- Foreign Exchange Markets
- The Yuan Now Pegged to the Dollar again!?!
- Mishkin's Chapter 3 PPT
- Central Banks - the Fed, the PBC (People's Bank of China)
- The Money Supply and Financial Intermediaries
- Problem Set I AVAILABLE HERE! The PS is due Tuesday, December 9, 2008 at the beginning of class for 15 points.
- What is a price index and how do we calculate them? CPI, GDP deflator
- Growth rates (inflation rate) will also be calculated.
- Bring your calculators today!!
- Day 1 PPT
December 4, 2008 Chapter 3: Understanding Interest Rates (continued)
- Please note: 6-packs and 12 packs are the same - "my bad" - not meant to be different! Problem Set 1.
- QUIZ - the 3 Goals of any MACROECONOMY! and 3 indicators!
- Review the price indices homework, questions?
- What is the value of any index at the base year?
- Bring your calculators today!!
- Mishkin's Chapter 2 PPT - For Review and Reading
- Growth rates (inflation rate) will also be calculated.
- Real versus Nominal Wage rates
- Some key concepts from your reading of Chapter 2: (See PPT)
- Primary and Secondary Markets
- Adverse Selection and Moral Hazard
- Transaction Costs and Economies of Scale
- Let's do the calculations:
- Simple Present Value
- Simple Loan
- Simple Present Value of a Future Amount
- Fixed Payment Loans - Yield-to-Maturity
- Coupon Bond Calculations - Consol Rate VERY IMPORTANT!!
- Day 2 PPT - Basic information about Chapter 2 - read on your own! REQUIRED!~
[Andrew's SILC Home
Page, Shanghai, China] - [Drew's Home Page, United States]
email: andrew at andrewparkes.com
Last Update: November 29, 2008
By Andrew L. H. Parkes, Ph. D.